Electronic Medical Device Manufacturing companies seek ways to tackle Semiconductor & Component shortage
Chip market to remain uncertain in 2022 as well. How will MedTech giants across the globe cope up with crisis. Know key ways to optimize product development lifecycle & reduce lead time.
Table of Content
1. Overview (In context with significant growth in IT and MedTech)
2. How did COVID-19 trigger the shortage?
3. How is the digital boom & chip shortage linked?
4. How are contract manufacturers managing chip shortages in Electronic Medical Devices?
Mr. Nolan living next door suffering from Sleep Apnea has a great deal of struggle. He still has no clue about where to get his CPAP (Continuous positive airway machine) that helps him breathe during his sleep. It's been almost 8 months since he placed the order and there is no stock available.
Patients like Mr. Nolan trust global MedTech brands to deliver quality healthcare that eventually depend on the Contract manufacturers they choose.
Figure 1 PCB-Johari DigitalFirst time in history semiconductor market will hit the mark of approximately $500 billion in 2021 by the year-end. After a massive leap this year still there is a significant gap between demand and supply in the chip market.
MedTech giants went uphill to cater to the massive demand for Ventilators, BP Monitors, Oxygen concentrators, Diagnostic tools, and so on. But, the excessive demand remained unfulfilled.
OEMs all over the world suffer from this acute shortage and this shall continue to last for coming year too. Not only does the MedTech segment suffer from the global semiconductor crisis, other industries including automobile, appliance, and electronic goods are also under great pressure.
Connectivity is no more a luxury which means everyone needs it. The hunger for accessible and cheap electronic devices to enable fast connectivity has made the chip market broke. Both, healthcare & digital are growing simultaneously which means manufacturers need find out ways to ramp up.
How did COVID-19 trigger the shortage?
The COVID-19 lockdown triggered a massive rise in demand in two major sectors of the economy, both of which depended on semiconductor suppliers
1. Information Technology - Digital Connectivity Gadgets
2. Healthcare & MedTech Device
Despite manufacturers being on their toes to fulfill the demand, still the demand and supply ratio will need more time to strike balance. The chip manufacturers and foundries are constantly increasing the prices due to excessive demand. Manufacturers all over the globe are experiencing component shortages, lead frame shortages, and ceramic capacitor shortages, and much more.
Recent updates reveal stretch time for ceramic capacitors has extended up to 6 months. The shortage and price increase will continue to last in 2022 as well. The lead time is doubled and projects are postponed due to extreme scarcity.
How is the digital boom contributed to the chip shortage?
From Samsung to Apple, many industry giants are experiencing semiconductor shortage. The delayed release of the much-awaited iPhone 12 was enough to reveal the depth of the crisis the industry is experiencing. Samsung being the second-largest buyer of chips has made a formal announcement to delay the launch of its high-end smartphone. Despite being the second-largest producer of chips, Samsung making such an announcement looks like an anomaly.
What led to this stage is one preliminary question?
After a deep analysis what we could figure out as key factors were:
Excessive rage in the health sector for digital electronic devices:
To begin with, this entire year was about developing medical devices & healthcare tools to track, diagnose and treat COVID-19. The market was flooded with multiple vendors offering different qualities of Electronic Medical Devices. The COVID-19 test kits, ventilators, and devices around COVID-19 became a part of every big & small MedTech company's portfolio. When everyone from everywhere got involved in Electronic Medical Device Manufacturing, it was very much evident that the chip market will experience a shortage.
Growth in demand for Electronic gadgets as a whole:
The consumer electronics market is experiencing a massive boom. Wearable healthcare technology, connected IoT-enabled appliances, smart speakers, and many more are a regular part of our lives. At the beginning of 2021, the global consumer electronics market grew by +18 percent, registering $42.8 billion in revenue. A significant rise in work from home and OTT entertainment platforms has been a key reason for this jump. The devices in this segment are all chip-based devices that eventually meant this sector played a crucial role in the acute semiconductor shortage.
How are contract manufacturers managing chip shortages in Electronic Medical Devices?
Contract Manufacturers are having a tough time with their extended product lifecycles and doubled lead times. Some tips on how we manage to fast pace your Medical Device Product Cycle.
Staying in constant touch with Suppliers
A strong supplier network is necessary to ensure you always have options. Experienced contract manufacturers have a strong network of suppliers for all their parts. Partnering with contract manufacturers with a strong supplier network ensures quality components and reduced chances of delay.
At Johari we have a strong bench of 400+ suppliers all over the globe to keep our manufacturing and your product’s Go-To-Market on track. We remain in constant touch and perform regular vendor and supplier audit to ensure they supply quality parts at optimum price.
Technology Road- Maps
Technology Road-maps are necessary to keep everyone working on the project is on the same page. Someone working on PCB might not know the relevance of documentation or vice versa. In an organization where too many people work on a project, it is common to lose a chord at some point. To keep things on track and requirements pre-defined it is important to keep everyone in the loop. Pre-planning helps in preventing delays and also gives ample time to sort suppliers.
Away from single-sourced parts
Smart contract manufacturers do not use obsolete or nearly obsolete parts. A single-sourced part can fail anytime or it might become extremely difficult to obtain. For obsolete components, it's best to find alternatives that are cost-effective and easy to procure.
Product Design
As Product Designers, people in a Medical Device Manufacturing company have a special role to modify the design in compliance with Regulatory guidelines and easily available parts. The design should also be flexible and adaptive. This ensures even if the prices for some parts hike it's possible to make relevant changes.
Communicate Transparently
Layered communication is a big problem. It leads to mess at various levels. It's important to communicate things efficiently and keep client expectations balanced. As your Contract Manufacturing partner, it's important to communicate on-ground challenges and impact on the end outcome.
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Medical Equipment Manufacturers in India - Johari Digital Healthcare Ltd